Business Observations

Expansion or Contraction in trouble times??

With the Corona Virus hitting all industries to some degree, either positive or negative, now is the time to really dig deeply into your business and look for expansion opportunities.

Is your business contracting because of what you as a business owner or manager are doing? Did your revenue decrease because of your decisions leading up to this crisis? Every day we get bombarded with information and ultimately create excuses or reasons why our revenue increased or decreased, that day/week/month or qtr. Now, suddenly all I hear is Corona Virus excuse. The best bit is that Governments are supporting the excuse. Yes, it’s a bad virus, this post is not about the virus. Rather it is about our response as business owners and managers and ultimately as leaders. Suddenly, we have to think, and we don’t like it, so the government says ok, here is some money so you don’t have to think or work too hard for.

When an economy is contracting, that as an entrepreneur creates opportunity. If you want to have that edge that difference establish a growth mind set, how can your business expand in tough times, where are the new opportunities, has the economy, by contracting created what opportunity for you to lead your industry and take massive action?

Over the last 6 months I reflect on my own action, in December I had major surgery which put me 4 weeks in hospital. During that time, I got rid of one of my business partners, because he did not step up, and the beauty of hardship is that you get to know quickly what and who your business partners really are and what their underlying motive is. I then dealt the affects of the surgery until right now where I am in hospital writing this post.

But during that time as a business, there has been massive expansion, I have implemented strong growth opportunities into the businesses I own, and this Corona Virus has created opportunities to buy other businesses due to mismanagement on strong valuations.

Have I been busy, in my mind not really, been sitting on the couch a lot due to hospital and major surgery reasons, but that does not stop us as human beings from thinking and working out how to optimize and maximize our current businesses and where the future opportunities exist if the world goes into recession.

After talking to a lot of wannbe entrepreneurs, really the only difference between me and them is that I take firstly: Action and secondly: Commitment.

Here are some observations:

Early in the year 2 entrepreneurs came to me and ask me to fund their business. After a lot of meetings, I agreed and saw the opportunity. After the relevant paperwork and agreements were signed, I went to work and pulled of the impossible within 2 weeks. Now a bit of perspective these guys were working on this for years, what I got done in 2 weeks. But the problem is that I had more conviction in what they were doing then they did. Because I moved so fast, and because my conviction trumped theirs, they pulled out. So, my question to entrepreneurs is this, are you like these 2 and like the idea of something and think you want it, but really do not want it? Will you do whatever it takes?

Another observation is hard work. As a business owner do you lead by example or are you living in a dream world? You want to have something and be something, but when its time to step up, you contract and remove yourself. See when things get hard, I lean forward, where 99% of entrepreneurs lean backwards. Massive difference. The 99% want to lean forward and think they are, but they do not have the conviction and self-belief to pull it off and continue to push forward at all costs.

Observation 3, Self-Belief, everybody in my life told me to quit, don’t do it, go get a job, stress is what put you in hospital and the list goes on and on. I can only name 2-3 people who never told me to quit. See once again, and I think Will Smith said something along these lines as well, if you don’t have the belief and conviction in yourself, no one else will, and even your wife and family won’t believe you and won’t support your dream until you get to where you are going. Only once you are, where you are heading people believe you. There is a whole psychology around this and I don’t wish to get into it, as it’s not the point of this post, but at the end of the day as a business person and entrepreneur, if you don’t have that self-belief and you let people talk you out of “going for it” you will never achieve your goals or dream. There is resistance at every corner, from family to banks to friends to economy to governments and so on. But what are you going to do about it and how are you going to stand up and make a difference?

Now adays I do not tell anyone anything. They will find out once it is done. That way I don’t waste my precious space in my mind, and I don’t waste my airtime to hear their negative or redundant, opinionated verbal well-meaning but ignorant words.

Observation 4 call me cynical but I believe everyone outside of my direct business interests, is trying to screw me.

On saying that I a skeptical optimist. I will question everything, know I am getting screwed at every corner, but now I know that I always have a plan or a strategy, or something that will always give me the edge. Think a min 2-3 steps ahead on every position you take, ask always what if, and end of the day if someone was selling you a business, they are selling it for a reason, and some reasons if you are naive you will never know. I work on knowing why they sold as quickly as possible, after I take ownership, you never find out before hand, so manage your risk accordingly.

That leads to observation 5, you don’t know what you don’t know. And even if you think you know something, you don’t know what you don’t know that effects that point/information that you do know. Live it, accept it, and move on. Try to be the smartest guy in the room, and when you have a feeling you are not, and cannot do something about it, make sure you mange your risk and the fact you don’t know what you don’t know, and you cant control or change what you don’t know.

Observation no 6, Money kills relationships. Numerous times I have got people and investors together and entrepreneurs kill deals or screw the people who got them their because suddenly shit is real and they get greedy. Trust me, what goes around, comes around. I have been screwed by “partners” twice in a year and lost over 9M due to this, but people say, oh you do not learn. Really? What I have learnt is that I am glad I got screwed by some person who needed me, as they will always need me, but I do not need them. I got them to where they are at and now, they “spat” me out all for money? Well at least I positioned these discussions and made it happen early in on the deal so I did not waste too much time, but more importantly I quickly get to know that they were never a good partner for me anyway. Its good to iron that part out early in the relationship. Imagine if I find out they were screwing me after 3-4 years in business together?? I do not want to go through what Zuckerberg and Winklevoss, that amount of problems is just chaotic. As a Christian we believe that the love of money is the root of all evil. And in these situations, we quickly get to see that, and where people stand and their loyalty of their actions to their loyalty of their words.

So if you’re an entrepreneur and you want investment capital or you seek advice on how to grow, firstly be careful who you bring into your circle of trust and friends and as investors, secondly once you commit to a relationship make sure you honor any verbal or written agreement and don’t screw the hand that fed you. Be vary careful and keep your people who got you to where you are close and on a solid relationship.

Observation no 7. People like to have a journey and not stick to the process and get to the end/completion of a project or opportunity. I am process driven, life is not a journey, it is step by step process to get what needs to get done, done. Journey if fine for your average mum and dad, but as a entrepreneur and business man you have to be process driven to get stuff done. When I buy a business it is unemotional, factual and straight to the point. I know that I don’t know a lot of stuff about the business, but I do know certain things, and do those items outweigh the items and the risk of the business on the things that I know that I don’t know. I see it all the time, entrepreneurs come to me and ask me for advice on whether to buy a business or to expand etc. I tell them straight up, the actual fact you need to come to me, is because you want confirmation either for your self as you are a touch insecure, which means in the end the opportunity will turn to a journey for you and not a productive process driven event, or secondly you want me to confirm what you already know. Do your work, think about and work out what you need to work and act. No one can do that for you.

Observation no 8.

Managing risk, I have never seen that most people know nothing about risk management. And I mean absolutely nothing. Maybe it was my time as a hedge fund manager, running high frequency trading robots, or building a solid return investment for investors trading stocks, options and futures with a avg return of 25.81% p.a. whatever it is having different businesses in different industries, but “manage your risk”. A couple of questions I ask, is if I liquidated the day after I buy the business, how bad or how good would the situation be? I have the accounts, analyzed the tax accounts, interviewed the seller’s accountant and done all due diligence, but what happens if the owner is source of the revenue and they walk out and the revenue or profits drop. There are literally a million ways a business revenue can drop on hand over, can you as the buyer handle that? How much of a drop can the business handle to still be a good investment. Where is the opportunity for growth in the business, can I clearly identify that? I also have a 5 minute rule, I walk in, if within 5 minutes I don’t get or understand the business, don’t like the owner, feel like I am getting screwed in a way that is unjustifiable or in a way that is done on purpose, etc I walk away and will just walk out the door. Do not care and stop wasting time on deals that will never be right.

Every entrepreneur that wants my help either financially or as a mentor, first thing they say is how they are going to generate or increase the profits/revenue of the business. Not one of them tell me how they will manage the losses of the business if it falls apart. Manage your risk properly and have good answers for all current risks and potentials risk and then profits and further growth opportunities will automatically follow. Stuff up your risk and you won’t have a business to manage. Oh that’s right, you wanted a journey…… and so the entrepreneur turns the process driven purchase or business into a journey. Rubbish and good luck.

Observation no 9. 99% of business brokers, and real estate agents hate me, and that is the way I like it. Why, because if the agent is promoting and telling you what you are doing is a good idea, and if you come in at XYZ price you will get the deal done etc etc, you are getting screwed and they are creating for you a journey in life. I work only with a very few brokers, the rest don’t get it, don’t get that I can stand in a business, give them my yes or no on the spot, analyze risk of the business within 5 minutes and give an offer. Brokers hate that, and most entrepreneurs hate it when you move to fast. But as the leader, if you cannt make the decision quickly and know where the risk lies and how much you can pay for something, then that fine, but you need to know that before the meeting and take along a trusted person to bounce those 1 or 2 items you don’t understand off. They don’t advise you; they just fill the gap in the knowledge you don’t have. Its up to you to pull the trigger and take responsibility. If you don’t have the required skilled person in your team, just move on and stop wasting time. Relationships are rubbish. The people I hang out with, know I can close and close fast and that is all that matters, they call me for the guy who can value a business in one meeting and give a solid settlement offer and negotiate the terms all in one meeting. Its business, it’s not a social get together. Just get the job done and move on. I know people who know everyone and are on good terms with everyone, but they cannot close a business deal for shit, and ultimately when asked behind closed doors, I often get the comment about this. People like people who can get shit done and do what needs to be done. If you are a serious seller, all you want is a buyer and no bullshit. I got told the other day that the reason the seller literally gave me a business is because of my intensity and focus. See that, not my personality, not our relationship, he gave it to me because he could see the focus, the intensity and the way I moved fast and confidently, and in his mind, he was confident I could pull of what needed to get done, and his “baby” would be around for a long time. And yes, he had other offers that were higher and better, but chose to go with me.

So, let’s not get confused. My employees, and co-partners in my businesses are family, we work hard to protect each other and build something exciting together. I know everyone personally, have an open-door policy so anyone can call me and we can have a open conversation about any topic. I try my hardest to make sure that when my employees or partners walk into my room or call me, I have as much time of the day for them as they need. I know that they are the cornerstone, and with out good employees and a solid relationship, I would have a troubled business. So I separate it, out side my doors is war, and I give people the amount of time the situation deserves, to get things done and not a second more, inside is about us as a team. Keep focused, know where you stand remember who is on your team.

But business is war, doing deals, strategic planning, getting the edge over your competition and so on is war. There are no friends and people will attack you left right and center and take you to court over such stupid things. I have come to learn that I am busy all day with building and being productive in society, but there are people out their who have no work, and are no good to society and all they want to do is drag people down to their level. Do not stand for it, decide to go to war and don’t get pushed around.

Observation 10, working from home, I do not think there is a statistic on this yet, but I have heard and read in a few places, that due to this corona virus employees have to stay home. It has been noted that there is a percentage of employees (quite high I am told) that are more productive at home then at their workplace. Firstly, the question jumps to mind, what were the managers doing when those employees where at work? Secondly.. What?? Think seriously about this, if employees are more productive at home then at work, then that means the managers and CEOs are building businesses that restricts employees, and an environment that does not let them get work done. On top of that, its quite obvious that if a employee is more productive at home, they no doubt have raised things with their owner/manager that would help them optimize and maximize their output during a work day, but their senior has not listened or heard them. This problem is causing no doubt billions of dollars a year in lost profits and revenues. Just because you are the owner, ceo or manager does not mean you have all the answers. Listen to what your employees have to say, work with them and encourage a work environment where there is open dialect and open discussion and door policy. You never know, your employee might give you an idea that could make you significant profits or create massive opportunities.

End of the day, doing deals and getting stuff done, and making a difference excites me, and I am told I am good at it and extremely focused in the business world. I have been called, the sharpest business mind in Perth. But none of that is important, and if you are doing business for the money, sorry but your leading an empty life. No one is your friend, they either want your money or want to use you and then spit you out. I have my own person reasons, that no one knows and will never know, but what I do know is that building stuff, being productive, contributing to society, paying taxes and so on, is leading a full life. So, if you have talents, work out a way to use them, and only you can make a difference so be strong and confident in yourself and you decisions, and take action.